It's not easy finding unstoppable stocks that trade for less than $100, because if a stock appears to be truly unstoppable, people notice and buy more of it, often driving its share price into the triple digits.
Stag Industrial (STAG 1.60%), Realty Income Corporation (O 1.94%), and Pfizer (PFE 2.40%) are all well under $100 a share and have three factors that help make them unstoppable: consistent revenue or funds from operations (FFO) growth, consistent earnings before interest, taxation, deprecation and amortization (EBITDA) growth, and solid dividends with regular increases to keep investors loyal.
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Stag Industrial is riding the e-commerce wave
Stag Industrial has seen its shares rise by more than 46% for the past year. The real estate investment trust (REIT) specializes in leasing single-tenant industrial warehouse spaces, particularly to e-commerce companies, with 40% of its portfolio involved in e-commerce. The pandemic merely fanned the flames of the already hot e-commerce trend, and those flames are unlikely to be doused, as consumers have changed their habits to include more online shopping.
The company enjoys diversity among its tenants, who are involved in more than 45 industries. Stag has 517 properties across 40 states and 60 markets. The company's largest tenant, Amazon, represents less than 3.8% of its tenant base.
Over the past five years, the REIT has increased quarterly FFO by 202.7% and FFO per share by 51.51%. Its EBITDA has grown by 137.7% over that period. The company has raised its dividend every year since it began distributing them in 2011 and recently raised its monthly dividend of about $0.12 per share by 6.9%, which means a current yield of 3.4%. The company's stable long-term leases should protect that dividend. In the third quarter, its occupancy rate was 95.9% with an average term remaining of 5.1 years, and Stag's adjusted FFO payout ratio (trailing 12 months) is 75, which is perfectly safe for a REIT.
The company appears to be going through another strong year financially. Through nine months, the company reported $243.5 million in FFO, up 15.7% year over year, with FFO per share of $1.56, up 10.6% over the same period in 2020.
The Realty Income Corporation is all about consistency
Realty Income, a REIT that specializes in commercial properties, owns (as of Sept. 30) 7,018 buildings in all 50 states, Puerto Rico, the United Kingdom, and Spain, spread among 650 clients in 60 different industries, with an average remaining lease term of 8.8 years. Through the third quarter, the company's occupancy rate was 98.8%.
Its biggest tenant, 7-Eleven, accounts for only 5.7% of its properties. Like STAG Industrial, Realty Income pays out a monthly dividend. It may look like a gimmick, but its 4.14% yield helps attract investors, and it is hard to argue with the results.
Since the company's founding in 2007, the company has a total return rate of 15.1%, better, over that 14-year period, than the Dow Jones Industrial Average's total return rate of 10.9% and the S&P 500's total return rate of 10.7%.
The stock is up more than 25% over the past year. The company has grown quarterly FFO by 61% over the past five years and EBITDA by 54.2% over the same period. Through nine months, the company's FFO was a reported $1.39 billion, up 13.4% year over year, but its FFO per share was $2.41, down 2% over the same period in 2020.
In September, the company raised its monthly dividend by 0.9% to $0.707 per share, marking the 96th consecutive quarter in which it has made an increase. That works out to a yield of 3.98% with an AFFO payout ratio of 76.7%, which is, like Stag's, quite safe for a REIT with stable cash flow.
Pfizer's vaccines are the icing on the cake
Pharmaceutical company Pfizer's shares are up more than 49% over the past year, driven by the sales of the Comirnaty COVID-19 vaccine it developed with BioNTech. Moreover, the mRNA technology that Pfizer used to develop its COVID vaccine will be useful toward improving and developing other therapeutics, including flu and shingles vaccines, the company said.
However, the company has more going for it than just the vaccine, as it has 94 clinical programs, with more than a third of them in late-stage clinical trials or awaiting approval. On top of that, the company's new COVID-19 antiviral pill, Paxlovid, is expected to be a big sales driver this year. Over the past five years, the company's quarterly revenue has climbed 88.54%, and its quarterly EBITDA has risen 66.3%.
Through the first nine months, the company reported revenue of $57.6 billion, up 91% year over year, and diluted earnings per share of $3.27, up 1,209% over the same period last year.
Pfizer raised its quarterly dividend by 2.6% to $0.40 a share this year, the 12th consecutive year for which it has increased its dividend. Thanks to the company's share growth, the yield is a relatively modest 2.9%. There's little risk of the dividend being cut, as the cash dividend payout ratio is only 29.64%. The company has increased its dividend by 25% over the past five years.
A nice problem to have
It's tough to choose among these three dividend stocks. Pfizer has had strong revenue growth, and it has the lowest price-to-earnings ratio (P/E) of the three at 16, but its revenue gain is closely tied to the pandemic, and it is unknown how much the company's vaccine and antiviral pill will be needed, say, five years from now. However, the company's large portfolio of drugs and its late-stage pipeline should continue to drive sales.
Of the other two stocks, I like Stag Industrial the most because it has the most momentum from a revenue standpoint, it has a lower P/E ratio at 34 than Realty Income's 54, and I don't worry that e-commerce sales will go backward.
